Illicit trade threatens UN SDGs

Illicit trade feeds violence and breeds corruption, undermining trust in institutions and the rule of law, and generating enormous illegal financial flows.
The Transnational Alliance to Combat Illicit Trade (TRACIT) and United Nations Conference on Trade and Development (UNCTAD) stated that illicit trade has a negative impact on the UN Sustainable Development Goals (SDGs).
“From smuggling, counterfeiting and tax evasion, to the illegal sale or possession of goods,services, humans and wildlife, illicit trade is compromising the attainment of all 17 of the UNSDGs,” stated TRACIT Director-General Jeffrey Hardy.
“It is crowding out legitimate economic activity, depriving governments of revenues for investment in vital public services, dislocating millions of legitimate jobs and causing irreversible damage to ecosystems and human lives.”
TRACIT’s new report, Mapping the Impact on the Sustainable Development Goals of Illicit Trade, maps the 17 UN SDGs against the following sectors.

  • agri-foods, alcohol, fisheries, forestry, petroleum, pharmaceuticals, precious metals and gemstones, pesticides, tobacco, wildlife and all forms of counterfeiting and piracy

These sectors were chosen because they participate significantly in international trade and they are particularly vulnerable to  illicit trade.

Private sector has vital interest in outcome

As illicit trade weakens the viability and sustainability of industries, it simultaneously dilutes private sector contributions to achieving the SDGs.
For example, it is a form of unfair competition that undermines private sector contributions to economic growth and employment.
It chokes off market growth, sabotages global supply chains, squanders natural resources and endangers market security.
Fake products and inferior materials in supply chains harm consumers and tarnish consumer perception of a corporation’s social responsibility performance.
In some cases, it poses significant threats to the safety and security of personnel and facilities, all adding to the increasing costs of doing business.
Where proliferating illicit trade creates socio-economic instability, it dampens private sector investment, holds back research and development (R&D) and discourages technology transfer.
For these reasons, the private sector has a vital interest in defending against illicit trade, helping itself across industry sectors and playing an active role in promoting the SDGs.

Key findings from the report

There are notable “macro” impacts where illicit trade cuts deeply across many of the SDGs, undermining achievement of the economic goals for poverty reduction, decent jobs and economic growth (SDGs 1, 2, 3, 4 & 8), and robbing governments of taxable income that can be invested in public services (SDGs 9 & 17).
When it generates revenue for organized criminal and terrorist groups, illicit trade undermines goals for peace and stability (SDG 16).
Most forms of illicit trade plunder natural resources (SDGs 6, 14 & 15), abuse supply chains and ultimately expose consumers to fake and potentially harmful products (SDG 12).
While findings show that it poses a threat to all 17 SDGs, nowhere is the nexus as evident than in SDG 16 (Peace, Justice and Strong Institutions) and SDG 8 (Decent Work and Economic Growth).
Illicit trade – in all its forms – stands in direct juxtaposition to SDG 16, by feeding violence and breeding corruption, undermining trust in institutions and the rule of law, and generating enormous illegal financial flows.
Moreover, the links between illicit trade and organized crime are well established.
From human trafficking networks and tobacco smuggling, to fuel theft by drug cartels and the involvement of the mafia and organized criminal groups in the trade of counterfeit products.
Perhaps most frightening are links to terrorist financing that heighten threats to national and global security.
Taken together, economic leakages across the sectors susceptible to illicit trade create an annual drain on the economy of US$2.2 trillion.

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